As the Select Committee Inquiry into Banking Competition
hearings draw to a close for 2024, Cooperative Business NZ,
the voice for the country’s cooperatives and mutuals, is
backing calls to create a fairer banking environment for
smaller and specialist banks.
These banks are asking
for changes that will help them compete with the large
Australian-owned banks and give Kiwis more choices, CBNZ
Chief Executive Saya Wahrlich says.
“In particular,
mutual banks such as SBS Bank and those with a cooperative
ethos, play a unique role in New Zealand, often helping
underserved communities or communities with specific needs,
such as farmers and food producers, and offering
alternatives to big banks. Their focus on people, not
profits, means the benefits are returned to members, stay in
New Zealand and directly support local communities,” Ms
Wahrlich says.
“Right now, capital risk
settings disproportionately favour the large,
Australian-owned banks, allowing them to hold less capital
relative to their size and systemic risk. Plus, smaller
banks face disproportionately high compliance costs relative
to their scale, further entrenching the dominance of larger
banks.”
More standardised credit risk
methodologies and tiered capital requirements would address
the capital risk settings imbalance, enabling smaller banks
to compete more effectively. Regulatory reforms should
account for disparities in compliance costs to create a
fairer and more accessible banking environment, Ms Wahrlich
says.
Advertisement – scroll to continue reading
“The large banks’ access to lower-cost funding
is amplified by their scale. Measures to equalise funding
opportunities over and above recapitalising Kiwibank to act
as a ‘maverick’ would support other challenger banks in
providing more competitive offerings.”
As
member-owned entities, cooperatives and mutuals look ahead
to a sustainable, inter generational future, as evidenced by
their enduring natures. Strengthening their ability to
compete will empower these banks to drive meaningful change
in the sector and better serve all New
Zealanders.
Cooperative Business NZ joins its members
in urging policymakers to prioritise these changes to ensure
a more competitive, equitable, and resilient banking sector
for the benefit of consumers and the New Zealand
economy.
This post was originally published on here
